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Putzmeister, Schwing Become Chinese-Owned Companies

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Photo Courtesy Schwing America Inc.
Schwing America emerged from Chapter 11 bankruptcy in 2010. Its German parent is now being acquired by China-based XCMG.
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China's Xuzhou Construction Machinery Group, or XCMG, is acquiring a majority stake in Germany's Schwing Group GmbH. The deal, announced at the Intermat construction show in Paris last month, confirms earlier reports in ENR and falls on the heels of another Sino-German acquisition, that of Putzmeister Holding GmbH by Sany Heavy Industry Co. Ltd.

German management will remain in charge, said XCMG in a statement. The 78-year-old Schwing brand name is a critical part of XCMG's "strategic development" for expanding into lucrative Asian markets, the company added. China is the world's largest market for truck-mounted concrete pumps, accounting for roughly 4,000 of the 6,000 machines produced worldwide last year.

XCMG boasts advantages in lift and pavement machinery, with a more than 50% share in both markets, reports Netease Finance, with 300 dealers in China and more than 120 internationally. In the excavator and concrete sector, however, XCMG has fallen behind Chinese rivals Zoomlion Heavy Industry Science and Technology Co. Ltd. and Sany Heavy, both of which have recently extended market reach through acquisitions. Sany and Zoomlion captured 50% of the $16.7-billion concrete machinery market in 2011, while 23-year-old XCMG generated operating revenues of only $312.5 million from the same sector last year.

"Chinese manufacturers are expanding their presence, especially in Europe," says Lawrence De Maria, who co-heads Chicago-based William Blair & Co.'s global infrastructure group. "They are acquiring technology at a reasonable price while gaining a market foothold."

Although the transaction price is unknown, XCMG is seeking a three-year, $210-million loan as part of the Schwing purchase, news agency Reuters reports. Meanwhile, Schwing is trimming expenses and cutting 170 positions, or more than a fifth of jobs, at its Herne headquarters as a precondition of the sale, according to the Financial Times. The privately owned company employs about 3,300 staff in seven countries.

"At this point, we do not have any additional information to share," said Tom O'Malley, Schwing America Inc. vice president of sales and marketing, in an e-mail exchange. The St. Paul, Minn.-based subsidiary emerged from Chapter 11 bankruptcy in 2010 following deep cutbacks in concrete construction. On Jan. 30, Sany agreed to buy a 90% stake in Putzmeister for $426 million.


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